UBS consumption indicator: solid despite slight decline in April
The UBS consumption indicator declined slightly in April, following a sharp increase the previous month. At 1.72 points, however, it remains at its second-highest level since January 2011 and indicates robust private consumption.
Zurich/Basel, 28 May 2014 – Consumer sentiment worsened a bit in April: the UBS consumption indicator weakened slightly from 1.84 to 1.72 points. The decline in the overall index was tempered by a considerable improvement in business activity in the retail sector and somewhat higher registrations of new cars.
The consumer sentiment index, which is compiled by the State Secretariat for Economic Affairs (Seco) and integrated into the calculation of the UBS consumption indicator as one of five sub-indicators, fell slightly from 2 index points to 1 in April. Consumers in Switzerland assess the general development of the economy somewhat more pessimistically than previously, though they view job security more positively, probably due in part to declining unemployment rates.
The sub-indicator on business activity in the retail sector jumped from 6 to 17 points in April, reaching its highest level since January 2011. Good sales figures and declining pressure on margins appears to have lifted the mood among retailers. The negative trend in car sales was temporarily halted in April. Compared with the previous month, registrations of new cars rose by 10% in Switzerland, to 27,800, on a seasonally adjusted basis. Though the figure remains 2.1% below last April’s, it represents a pickup from the considerably weaker start to the year and reduces the cumulative 2014 decline from 4.7% to 3.9%.
Sources: Seco, UBS
How the UBS Consumption Indicator is calculated
The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead time of about three months on the official figures. At roughly 60%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from five consumer-related parameters: new car registrations, business activity in the retail sector, the number of domestic overnight hotel stays by Swiss residents, the consumer sentiment index, and credit card transactions made via UBS at points of sale in Switzerland. With the exception of the consumer sentiment index, all of this data is available monthly.
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